Be honest—if your kid came home beaming with pride for getting a 20% on a spelling test, you’d be questioning their understanding of math (as well as language arts). Because 20% just doesn’t sound impressive. But what if your grade-schooler was being quizzed on a list of 500 doctoral-level vocabulary words? You may then be tempted to call Mensa.

The same can be said of solar panel efficiency ratings. Once you understand what’s behind the grading system, where peak performers register percentages in the low 20s, you may have a better appreciation for the advances made in solar panel efficiency over time.

How is solar panel efficiency measured?

Simply put, solar panel efficiency is the ratio of energy from sunlight that a panel can transform into electricity. If you want to be a little more technical, here’s the formula:

Even without plugging in any numbers, you can see that the more watts a photovoltaic (PV) cell can produce (using the same amount of sunlight), the more efficient a solar panel will be. This can be important when evaluating commercial solar panels, but we’ll cover that later. First, let’s learn a little history.

A short history of solar cell technology

Humans have been tapping the power of the sun for centuries. Magnifying glasses were used to concentrate the sun’s rays to ignite fires in the 7th century B.C. Architects throughout history have built structures with an eye toward the sky to capture as much radiant heat as possible. But it wasn’t until the 1800s when the PV revolution really kicked into high gear. Here are some highlights:

1839:Edmund Becquerel discovered the photovoltaic effect in France when he noticed the voltage between two metal electrodes in an electrically-conductive liquid increased when exposed to sunlight.

1873:Willoughby Smith discovered that the element Selenium has photoconductive properties.

1876:William Grylls Adams and Richard Evans Day created a selenium solar cell that produced electricity when exposed to light, proving that solid matter is capable of transforming light into electricity (less than 1% efficient).

The major take-away from this quick skip through time is that the history of solar panel efficiency shows impressive advances at first, but is now running up against the barriers of physics. Higher efficiencies require technologies that are harder to produce at scale at an agreeable cost. In other words:

…don’t expect any major jumps in efficiency for commercially-available solar panels any time soon.

In fact, depending on which physicist you talk to, there is also a very real theoretical limit to how much efficiency is possible for commercially-viable modules. Most authorities put that upper cap at about 30%. For some perspective, the average commercial solar panels manufactured today (with a few exceptions) hit a range of 17% to 20%.

Bottom line: While the future of solar technology is bright, advances will likely be modest for high-efficiency commercial solar panels.

But records are made to be broken, right?

Creating high-efficiency commercial solar panels that break records is a worthy goal. However, when you see claims of a new efficiency milestone being reached, be warned the results are often confined to the laboratory with no practical real-world applications on the horizon. The maximum efficiency number noted earlier is for something called “single junction cells.” These are your standard, mass-produced (and relatively-inexpensive) solar cells. When you see efficiency numbers climbing into the high 20s or beyond, be sure to read carefully. It usually means there’s some fancy tech going on that won’t likely hit the commercial market any time soon (if ever).

There are some other processes that can produce greater solar efficiency rates that do offer real commercial potential. For example, layers of different materials can be sandwiched into a single cell to capture different light spectrums, resulting in greater efficiency (more light is captured). Another approach uses lenses to concentrate sunlight onto small, highly-efficient cells (more sunlight goes into the cell, so more energy is produced). These applications can vastly improve solar panel efficiency, but likely at a considerably higher cost. The added expense may be worth it if you’re trying to power an orbiting satellite, where size, weight and amount of power generated are key. For commercial solar power systems, however, they simply aren’t practical.

Comparing efficiency ratings

Now that you have a better understanding of what you’re looking at when you see a solar panel efficiency rating, here are a few other things to think about:

Not all solar cells are made the same. Seems obvious, but it’s worth noting. Take the industry-dominant silicon solar cell. Is it mono- or polycrystalline silicon? Monocrystalline silicon is purer and produces a more efficient solar panel. However, it is also more expensive to produce. For an interesting overview of the pros and cons of different types of solar panels, check out this article from Energy Informative.

Not all solar equipment providers readily offer up the efficiency of the panels they sell. It could be the company doesn’t want to provide the information if it doesn’t help sales. Or, they could actually believe that efficiency is not important. Having this information is required by law, so don’t hesitate to ask.

So how important are efficiency ratings?

Are efficiency ratings important if the differences are within a few percentage points? That depends who you ask.

Some argue that as solar cell costs go down and efficiency improves, it becomes less important because mounting hardware, inverters and other components of a solar power system have a bigger impact on the overall instal.

Others counter that solar panel efficiency is important because more efficient solar panels can produce more power in the same amount of space. This is great for constrained areas or if you just want to get maximum output. It could also mean fewer solar modules to generate the energy you need, which can lead to lower installation costs and less preventative maintenance down the line.

When you realize that commercial solar is a long-term commitment, it would be short-sighted to focus solely on up-front costs. Considering solar panel efficiency ratings, as well as other aspects of your investment that could lead to the most savings over the life of your system, is not only important—it’s the smart thing to do.